After a period of generally disappointing growth in 2011 and 2012, the UK economy showed clear signs of recovery during 2013 and we expect this to continue in 2014-15. All major industry sectors and regions are now showing positive growth trends.
Given these projections, the UK could overtake France, to become the fifth largest economy in the world before 2020.
Inflation appears to be under control for now, but interest rates are likely to start rising gradually from late 2014 or early 2015 in order to keep inflation around target in the longer term.
Higher interest rates will be one factor causing recent rapid rates of house price inflation to moderate later in this decade, as discussed in detail in this report. But the housing market remains an important source of risk for the UK economy, together with possible global shocks and relatively weak productivity growth.